Back-To-Back Rate Cases Is An Unlikely Event

The following is a perspective by postal commentator Gene Del Polito for Direct magazine. The views expressed are the author's.

The Washington postal community has been abuzz with the rumor that the U.S. Postal Service (USPS) is planning to file for another postal rate increase sometime during calendar year 2001. Postal users are flabbergasted at the thought of a postal rate increase coming so quickly on the heels of another. But, is the rumor true? Is the Postal Service planning--or, if not planning, talking about--filing a postal rate increase request in 2001?

Those who read Washington's postal tea leaves have interpreted recent statements by the Postal Service's chief financial officer as an indication that another rate case is coming. USPS CFO Richard Strasser told members of the Mailers Technical Advisory Committee that the Postal Service expected to complete its 2001 fiscal year with a net loss--even after it has implemented the new, higher rates from the year 2000 rate case. How, people are asking, can this be?

Well, depending on to whom you're speaking, the Postal Service's fiscal picture for 2001 may not be all that dire. For instance, while it's true the USPS may end FY 2001 somewhere in the red, a good chunk of FY 2001 will already have come and gone before the new rates are put into effect. If you were to judge the Postal Service's fiscal picture on the basis of the 2001 calendar year instead of the fiscal year, the USPS actually would complete its "year" with a bit of a surplus. In other words, there would be no emergent need for new revenue.

In addition, the only case the USPS could file on such short notice would be an across-the-board equal percentage increase similar to what it had done in 1994. That across-the-board proposal, however, can with the overwhelming endorsement of postal rate payers, since it was meant to give the USPS a quick fiscal shot in the arm to permit it to move ahead with its comprehensive mail classification case which was filed in 1995. I doubt seriously that whatever support the USPS might win for such a redux would ever be characterized as "overwhelming."

Furthermore, I don't think the Governors of the Postal Service would relish the idea of two rate increases back-to-back within two consecutive years. These are people who loathe anything that might trigger a congressional display of disapproval. In short, back-to-back postal rate increases don't seem to be in the cards.